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COUNTRY PROFILES


PROFILE

Country Profile

Area: 41,293 sq km (16,000 sq mi)
Population: 7.8 million (2010)
Capital City: Berne
People: German (64%), French (20%), Italian (6.5%), Rumantsch (0.5%), Other (9%)
Languages: Swiss German, French, Italian, Rhaeto-Rumantsch
Religion(s): Roman Catholic (46.1%), Protestant (40%), Muslim (4.3%)
Currency: Swiss franc (SFr)
Major political parties: Radicals (FDP – [party president] Fulvio Pelli), Christian Democrats (CVP - Christophe Darbellay), Social Democrats (SP - Hans-Juerg Fehr), People's Party (SVP - Toni Brunner)
Government: Seven member Federal Council
Political system: Federal Republic with strong local governments (cantons)
Head of the Federal Department of Economic Affairs: Johann Schneider-Ammann
President of the Confederation 2010 and Foreign Minister: Micheline Calmy-Rey (since 2003)
Membership of international groupings/organisations: Council of Europe, EAPC/PfP, EBRD, EFTA, IBRD, IMF, OECD, OSCE, UN, UNESCO, UNHCR, WTO, Schengen

Did You Know

-- Zurich, Berne and Geneva are all ranked in the top ten cities of the world according to the Mercer Human Resources Consulting Quality of Living survey 2011.

-- Nestlé is the largest company in Switzerland, yet more than 98% of its revenue comes from outside the country.

-- Swiss Guards still protect the Pope at the Vatican. The Red Cross was started in 1864 by Henri Dunant in Geneva.

-- The symbol of the Red Cross is based on a reversed Swiss flag.

-- Switzerland manages about a third of all private and institutional offshore funds.

-- Switzerland is responsible for around half the value of the world’s watch production.

-- Switzerland has the densest rail network in Europe - 121.9 km of rail per 1000 km2, more than 2.5 times the European average.

-- Switzerland has the steepest funicular railway in the world: the Gelmerbahn at the foot of the Grimsel Pass, which reaches 106% gradient in places.

-- Switzerland is the second most densely forested country in Europe (30%).

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ECONOMY

Basic Economic Facts

GDP (real): CHF 550.1 billion (2010)
Country comparison to the world: 38 (2010)
GDP per head: $42,900 (2010 est.)
Annual Growth: 1.3% (comparing 3rd quarter 2010/2011)
Inflation: -0.717% (Dec 2011)
Unemployment: 3.1% (Nov 2011)
Major Industries: Banking and insurance, machine and precision tools, textile machinery, chemicals and pharmaceuticals, watches, telecoms, graphic machinery, food processing and packaging materials, electrical and mechanical engineering.
Major trading partners: Germany, France, US, Italy, UK, Japan, Netherlands, Austria
Exchange rate: GBP1 = CHF 1.46 (Jan 2012)
Switzerland has more global companies than any country of comparable size. Four of these feature among the top ten largest in Continental Europe. With few natural resources, the two mainstays of the Swiss economy are its substantial “invisibles” sector and its well-established, largely export-orientated, industrial manufacturing base. Noted for its high-quality precision engineering industry, Switzerland is also successful in other key sectors such as pharmaceuticals, chemicals, telecommunications, food processing and packaging, graphics and electrical and mechanical engineering.

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HISTORY

Switzerland is in many ways unique. Swiss politics has two defining characteristics - neutrality and direct democracy (see Politics below) – shared by few others. With four official languages, divisions between Catholic and Protestant areas, and a foreign resident population of over 20%, traditions of consensus building, neutrality and direct democracy are anchored in Switzerland’s past and above all its Constitution.

The Swiss Confederation was originally founded in 1291, when three cantons (Uri, Schwyz and Unterwalden) agreed on a defensive alliance to protect the inhabitants’ autonomy under the Habsburg Empire. In the following centuries, the Confederation grew steadily as other cantons, towns and villages joined the alliance. In 1798, it was invaded by France and became the unified Helvetic Republic. After regaining its independence in 1815, the Confederation’s borders were fixed by the Congress of Vienna. Switzerland's policy of permanent armed neutrality became internationally recognised.

In 1848 the previous loose confederation of states was replaced by a federal state, and the Swiss Federal Constitution was drawn up. This reserved specific and limited powers to the federal authorities but gave the rest to the cantons. Over time further obligations were allotted to the central authorities and a number of popular rights were guaranteed federally. The distribution of power between approximately 3,000 independent communes, 26 sovereign cantons (of which 6 are “half-cantons”) and the central Confederation with its seat in Berne has remained unaltered to the present day. This Constitution, which was thoroughly revised in 2000, enshrines both the principle of neutrality and the autonomy of the cantons on which the system of direct democracy is based.

Switzerland’s economy developed as a result of its position on major North-South trading routes. Despite a lack of natural resources it was one of the earliest countries to industrialise. By the end of the 19th century it was one of the most industrialised countries in Europe. It remained neutral in both World Wars, and this helped create conditions for sustained post-war economic growth. In spite of the deep recession of the 1990’s and global economic slowdown since 2007, Switzerland remains a highly prosperous country.

Longer Historical Perspective

BBC News Country Timeline: Switzerland (http://news.bbc.co.uk/hi/english/world/europe/country_profiles/newsid_1035000/1035212.stm)

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INTERNATIONAL RELATIONS

Switzerland has been a member of the European Free Trade Association (EFTA) since 1959 and a member of the World Trade Organisation (WTO) since 1995. Switzerland is not a member of the European Economic Area (EEA) after membership was rejected by referendum in 1992. A March 2001 referendum on opening an EU accession dialogue was also defeated. Nonetheless the political debate on EU membership continues, and in general Swiss laws continue to be made compatible with EU legislation.

In 2002, the ‘Bilaterals I’ package came into force, including an agreement on the Free Movement of Persons (FMoP) between Switzerland and the then 15 EU members, and agreements on air and land transport, agriculture, removing barriers to trade, public procurement and research. FMoP was agreed for an initial period of 7 years. The Swiss parliament voted in summer 2008 that the agreement should remain in force and a popular vote on 8 February 2009 saw FMoP extended to include the newest EU members, Bulgaria and Romania. A ‘Bilaterals II’ package was concluded in 2004, covering participation in the Schengen frontier free zone, the Dublin asylum repatriation arrangements, the taxation of savings, the fight against fraud and Swiss participation in a range of EU programmes. As a result, the Schengen visa system applies to Switzerland and there are no longer immigration border controls with any of its neighbours. However, customs controls remain.

Currently, the Swiss government is aiming for negotiations on a ‘Bilaterals III’ package to cover issues such as taxes and electricity.

The government won a referendum in November 2006 to approve the 1 billion Swiss francs that Switzerland has agreed to pay to help reduce social and economic disparities in the new Member States (“Cohesion Payments”). The EU has started to push for another payment of the same nature. The Swiss Government have ratified the EU-Swiss Fraud Agreement and has brought it into effect provisionally bilaterally with a number of EU Member States including with the UK, pending ratification by the remaining Member States.

Switzerland joined the UN in September 2002 after a narrow vote in favour, but remains keen to steer a neutral/humanitarian course. It is now the second largest per-capita contributor to the UN system. Geneva plays host to a number of UN agencies. Switzerland was a key player behind the creation of the UN Human Rights Council in 2006.

Although Switzerland is not a member of NATO, it participates in some of its activities through the Partnership for Peace. Following a referendum in June 2001 the electorate approved a government proposal to allow the arming of military units deployed for peacekeeping operations. Switzerland now has approximately 220 military personnel involved in KFOR (the NATO force in Kosovo), as well as around 50 civil and military personnel deployed elsewhere.

Since the global economic crisis, Switzerland has come under pressure over its banking secrecy tradition. When the OECD put Switzerland on its “grey list” of countries not fully compliant with the organisation’s tax standards, the Government acted swiftly to negotiate/renegotiate double-taxation agreements with the necessary transparency conditions. Switzerland has now been removed from this list. Public debate has grown in Switzerland about the future of its large banking sector, which is dominated by two institutions, UBS and Credit Suisse, who were placed on the G-20 list of the globally most strategic banks in terms of importance to the global economy.

A series of Double Taxation Agreements (including with the UK) were ratified in 2010. Switzerland is currently negotiating separately with the UK and Germany on possible agreements to extend co-operation in tax matters.

The Swiss government is re-thinking its energy policy after the Fukushima events and is looking at possible cooperation with other European and especially its neighbouring states on energy trade, storage and transportation issues. Switzerland is aligning itself with EU targets on climate issues and is taking an active role in organising international dialogue, e.g. on climate financing.

Switzerland's relations with the UK

Relations remain excellent. There is regular contact at all levels over a full range of issues from the Balkans and mutual legal assistance to finance and cultural affairs.

Cultural Relations with the UK

British Council - Switzerland (http://www.britishcouncil.org/home/home-contact/switzerland.htm)

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GEOGRAPHY

Switzerland is a small, landlocked country (approximately twice the size of Wales), bordered by France, Germany, Italy, Austria and Liechtenstein. It is mainly mountainous (Alps and Jura) with a central plateau of rolling hills, plains and lakes - the largest of which is Lake Geneva. It is the second most densely forested country in Europe. One quarter of the land is unproductive and, with the exception of water (and hydroelectric production), there are few natural resources. Zurich (population 364,000) is the country’s financial and commercial centre. The other major cities are Basel (199,000), Geneva (180,000), Berne (129,000), and Lausanne (124,000).

Trade and Investment with the UK

In 2010 Switzerland remained the UK’s third largest non-EU market after the US and China, with goods exports totalling more than £ 5.2 bn. Switzerland is the seventh largest foreign direct investor in the UK, with Swiss with a total stock value of £27.8 billion. The top 30 Swiss companies provide over 200,000 UK jobs, and some 2,000 Swiss companies are estimated to operate in the UK. The Swiss buy more British goods per head (at over GBP 500 each) than anyone except the Irish, Dutch and Belgians in the UK’s top 15 export markets, and more than all but five countries worldwide. Swiss government figures record the UK as Switzerland’s fourth largest destination for outward investment after Germany, Italy and France.

Further information about Switzerland's economy can be found at UK Trade Investment Country Profile: Switzerland (http://www.uktradeinvest.gov.uk/ukti/switzerland) .

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POLITICS

Swiss politics are characterised by consensus and stability and voters have a large say in the political and administrative life of their country through a long-standing tradition of direct democracy. The legislative process can be slow as a result. All constitutional changes must be submitted to the vote (compulsory referendum). If at least 50,000 voters challenge federal laws, these are put to the vote (optional referendum). The use of referenda has increased in recent years although turnout has decreased to an average of below 50%. Even after lengthy debate to encourage consensus, referenda are often rejected. The government can decide to re-submit rejected legislation at a later date, but the electorate always has the final say.

Cantons and communes enjoy extensive powers and each raise taxes, administer themselves and elect their own parliaments. Responsibility for legislation rests with the lowest level of government deemed appropriate. The Federal government is formally only responsible for defence, foreign and economic policy. Federal expenditure accounts for only 30% of total public expenditure, though this proportion appears to be rising over time.

The government is a “grand coalition” of the four main parties, all represented in the Federal Council (cabinet) of seven Councillors of equal rank. This is elected every four years by the two chambers of parliament: the National Council with 200 members elected to represent constituencies, and the State Council representing the 26 cantons. Parties try to ensure that the main languages, religions and regions are represented in the Federal Council. Like all executive bodies at all levels of authority in Switzerland, the Council is run on a collegial system. Although composed of members of different political parties, these do not form a coalition. Members vote according to their convictions, but the decisions they take must be upheld by all the members collectively. The Chairmanship of the Federal Council rotates annually and its holder is the President of the Confederation.

The arrangement outlined above has long been stable, though economic and social challenges since the 1990s have prompted some changes. This is seen most notably in the rise of the right-wing Swiss People’s Party (SVP). Before 2003 seats on the Federal Council were allocated according a specific formula agreed in 1959. Currently, the four main parties divide the seven Federal Council seats between them as follows: 2 seats each for the Radicals (FDP) and Social Democrats (SP), 1 seat for Christian Democrats (CVP), 1 seat for the Swiss People’s Party (SVP) and 1 seat for the People’s Democratic Party (BDP).

In the Federal Council (Cabinet equivalent) elections in December 2007, the Swiss Parliament rejected Swiss People’s Party (SVP) MP Christoph Blocher and voted for Eveline Widmer-Schlumpf, who was excluded from the SVP as a result. She remained a member of the Federal Council and formed her own People’s Democratic Party (BDP). The 2011 Federal Council elections saw her re-elected in December 2011 despite the BDP getting only 5.4% of the Lower Chamber’s seats. The SVP, despite being the largest party in terms of Parliament seats, continues to occupy only one Federal Council seat. Eveline Widmer Schlumpf, Minister for Finance, is President for 2012.

The current Federal Councillors are:
Environment, Transport, Energy and Communications: Doris Leuthard (CVP; Councillor since 2006)
Home Affairs: Alain Berset (SP, Councillor since 2012)
Economic Affairs: Johann Schneider-Ammann (FDP; Councillor since 2010)
Defence, Civil Protection and Sports: Ueli Maurer (SVP; Councillor since 2001)
Foreign Affairs: Didier Burkhalter (FDP; Councillor since 2009)
Justice and Police: Simonetta Sommaruga (SP; Councillor since 2010)
Finance: Eveline Widmer-Schlumpf (BDP; Councillor since 2007)

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Last Updated: January 2012

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